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BEIJING: Japanese rubber futures closed higher on Monday for a second session, as concerns over conflict in the Middle East pushed rubber demand up and lifted crude oil prices.

The Osaka Exchange rubber contract for March delivery finished 1.3 yen higher, or 0.56%, at 232.3 yen per kg. Oil prices were up more than $3 a barrel in Asian trade as military clashes between Israel and the Palestinian group Hamas deepened political uncertainty across the Middle East and raised concerns about supplies.

Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. “In view of the escalating geopolitical tension and the resultant potential ocean freight disruptions and higher freight charges, tire companies are likely to increase their rubber inventory and thereby push the demand up for natural rubber,” said Jom Jacob, co-founder of India-based analyst firm What Next Rubber.

Chinese presence after a week-long holiday has also made the physical markets more live and active, Jacob added. China is the world’s biggest natural rubber buyer.

The rubber contract on the Shanghai futures exchange for January delivery closed up 120 yuan at 14,010 yuan per metric ton. The front-month rubber contract on Singapore Exchange’s SICOM platform last traded at 138.8 US cents per kg, up 0.1%. Japan likely won’t seek to reverse the yen’s downtrend with exchange-rate intervention as recent falls reflect economic fundamentals, former top currency diplomat Naoyuki Shinohara told Reuters.

US stock futures slid on Monday as conflict in the Middle East lifted oil and Treasuries, while the September US jobs report raised the rate stakes for inflation figures later in the week.

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